Fed workers to help cover payroll agreement's cost

John Fritze, The Baltimore Sun

New federal employees would contribute more than triple the amount paid by current government workers for their retirement under an agreement reached in Congress, according to two Maryland lawmakers who helped craft the deal to extend a payroll tax break and unemployment benefits.

The provision, which faced immediate pushback from public employee unions, would contribute $15 billion to the $140 billion cost over the next decade by requiring civilian employees hired after this year to chip in 3.1 percent of their pay to their retirement instead of the current 0.8 percent. Current employees would not be affected.

Details of the rare, bipartisan agreement to extend the payroll tax break began to emerge Thursday as congressional leaders scrambled to secure support for the measure, which could face a vote as soon as Friday.

"Current workers had an understanding when they started" of how much they would contribute to retirement, said Sen. Ben Cardin, one of two Maryland Democrats on the 20-member conference committee tasked with brokering the deal. "New hires will know the rules coming in."

Cardin, who is up for election this year, said he would support sending the proposal to the full Senate, but added that he is not pleased with the retirement provision and has not decided whether to vote for it. President Barack Obama called Cardin Wednesday to discuss the provision.

A member of the Senate Budget and Finance committees, Cardin said he indicated to the president and Democratic leaders that he could not support any further cuts to employees.

"This has to be it," he said.

Maryland is home to nearly 300,000 civilian federal employees — about 10 percent of the state's workforce, according to U.S. Census figures. Several federal agencies, including Social Security, the National Institutes of Health and the Census Bureau are based in the state.

The proposed changes come as federal employees are being targeted as a way to reduce spiraling budget deficits. The 2013 federal budget proposed by Obama this week calls for all workers to increase their retirement contribution by 1.2 percent over three years — saving $27 billion.

Republicans, meanwhile, have sought deeper cuts. A $260 billion transportation bill in the GOP-controlled House would require employees — current and future — to contribute 1.5 percentage points more to their retirement over three years.

A recent report by the non-partisan Congressional Budget Office found that federal workers earn 16 percent more than their counterparts in the private sector. Salaries are slightly higher, on average, but benefits are 48 percent more generous, the report found.

Labor leaders, who dismiss that report, said they are outraged by the agreement.

"Going after the pay and benefits of working-class men and women does nothing to create new jobs in this country," said John Gage, president of the American Federation of Government Employees.

Cardin and Rep. Chris Van Hollen, a Montgomery County lawmaker and the top Democrat on the House Budget Committee, were named to the conference committee in part to defend the federal workforce. The agreement puts them in an awkward political position of supporting the broad goals of the bill but opposing a key provision that would affect their constituents.

"I don't like the fact that a big chunk of the [savings] for the package comes out of the future federal workforce," Van Hollen said. "But I'm pleased that we were successful at holding all current federal employees harmless."